Loan News OFT Launches PPI Study Amid Consumer Group Pressure
14 April 2006
Following several separate complaints and independent studies showing how veiled Payment Protection Insurance (PPI) schemes are surrounding loans, the Office of Fair Trading (OFT) has launched its own study with the support of the Citizens Advice charity.
Citizens Advice made a super-complaint to the OFT in December last year, alleging that PPI is “over priced, badly sold and difficult to claim on”. The government department has responded by saying they will look into the issues surrounding PPI.
“These problems in the PPI business are not new,” claims Citizens Advice assistant social policy officer Francesca Hopwood. “We made noise about them ten years ago but even if it is long overdue, Citizens Advice welcomes the study.”
Andrew Hagger, head of news and press at MoneyFacts, agreed, claiming that the main problems stem from a lack of consumer knowledge on the subject.
“The problem is the pricing of PPI. Most of the people buy them from banks without knowing that independent companies sell the same product at a fraction of the price,” he said.
“In general banks try to sell PPI with a loan as a package because it is much more interesting in terms of profit than the loan itself.”
Some estimates put the cost of PPI at as much as 20 per cent of the total loan amount.
The results of the OFT study are due to be published at the end of the year. It is hoped the extra publicity this will generate will compel consumers to begin shopping around for PPI on loans, which will be helped by the expected increase in availability of quotes online.